Does Botswana have the Middle Child Syndrome?

(Headquarters of Botswana Development Corporation)

Nestled between Southern African giant elder brothers of international trade of South Africa, Namibia and Zimbabwe, the proud and aspirational country of Botswana is currently stuck at cross-roads, deciding which road to take to continue their economic development. Botswana can look back and recall the glorious past 50 years, which witnessed lightning speed increases in wealth, buoyed by the diamond trade revenue from the international De Beers organization.

The inflow of investment has enabled Botswana to not only develop infrastructure, but also radically increase the level of education. In 1966 Botswana had a total of 22 individuals with a PHD, now earning a graduate degree is the de-facto norm. During the boom period, until 2008, the country continued to expand, and then suddenly the diamond revenue stopped. During November, December and January the diamond major mines halted, and by March all shut down production.
The wake-up call was blunt and unexpected to many in the country. Despite investments in organisations like Botswana Development Corporation (BDC), which helped fund a rainbow of enterprises, ranging from theme parks to aluminium can manufacturing facilities, few firms yielded the gold returns that Botswana is in desperate need of. The diverse investments are indicative of the soul-searching that was a frequent message throughout our visits in Botswana.

Unlike the elder brother, South Africa, Botswana doesn’t have the same expectations or needs to drive the growth in Southern Africa. With strong social support of the government, the safety net enabled many citizens to find employment in public sector. Walking around the sun-scorched streets of Gaborone you find few of the Western chains that have become commonplace across Africa. You might find the popular Nando’s or Woolworths, but you will not find a Starbucks or even a McDonald’s. Unfortunately, Botswana with limited population of 2 million people just does not get the attention from multinational corporations it craves and needs.

Compounding the problem further is the youth’s default expectation of employment upon graduation. Until 2008 getting a job was the norm. Fast forward to 2017, this is no longer the case. Unofficial estimates of youth unemployment stand at 40%. The government is unable to fund the necessary job growth and neither does the private sector. Botswana needs to figure out the identity it wants to carve out for itself in the post-diamond era. The government so far has allowed citizens to travel globally, to study at the most elite colleges, including Harvard, Dartmouth and Yale, hoping for some to return and ignite the new-era growth. Yet this has not happened. On average one in two return.

For those that do return, they wait for government to take the initiative. The growth miracles of Korea, Singapore and China have come from the determined approach to drive forward industry. During our corporate meetings the industry leaders highlighted government’s tendency to stand back and wait for global firms to come to Botswana and invest. Yet the laissez-faire approach of last 50 years has not delivered the divestment the country is in desperate need of.

Ultimately, Botswana needs to clarify what identity it desires and not wait for someone to magically solve its problems. At 50 years old it is no longer a teenager. It has seen its siblings come of age, and now it needs to do the same. The vast country has one of the most educated populations across all of Africa. With strong leadership, like that of Lee Kuan Yew of Singapore, the country can make great strides in its development and continue the growth of the last 50 years that was driven by the diamond revenues.

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